Corporate Strategic Investment and Organizational Process:A Case Study on Four Taiwanese Companies

• Main Authors: YU-TING,DU, 杜玉婷
• Other Authors: JI-REN LEE
• Format: Others
• Language: zh-TW
• Published: 2004
• Online Access: http://ndltd.ncl.edu.tw/handle/70420658166542053913

碩士 === 國立臺灣大學 === 國際企業學研究所 === 92 === Corporate strategic investments has been regarded as a critical means for facilitating new business opportunities that are either within or beyond the existing business scope to supporting corporate growth. However, these kinds of corporate venturing initiative are subject to high risk and high failure rate. Considering the fast changing and hypercompetitive environment and a high expectation from capital market on sustainable growth, managing successful corporate venturing investments becomes a strategic task for general management. Nevertheless, previous research work apparently paid insufficient attention to this issue and it deserves further research exploration. The purpose of this thesis research is to bridge the gap by exploring the motivation, decision logic, organizational structure and processes undertaken by the corporate in engaging in strategic investments, from which a set of practical suggestions can be furnished. To accomplish this goal, we purposely select four companies from IT and traditional sectors that have been aggressively committing in strategic venturing activities. Our investigation focuses on those investments that are not merely for financial gain and not pertaining to subsidiary establishment. Taking an exploratory type of case research, we are able to establish a series of propositions responding to those research questions. Our study shows that corporate strategic investments are significantly influenced by the company’s expected growth, its past investment experience, and the economic cycle. There is a tendency that firms in the traditional sectors engaged more in diversified investment cases while those IT companies concentrate on investment that are related to their existing businesses. While diversified cases require coordination only in the capital availability, the relatedness cases need strategic coordination within the existing organizational context in order to reduce the potential conflicts in between. As far as the control and performance issues are concerned, we found that for those relatedness cases, firms have a variety of control measures, ranging from board controls to managerial controls. They will consider both financial performance and strategic measures for the cases being invested. For the diversified cases, however, companies will rely upon professional management and take financial performance as dominant measures of investment control. For the organizational heterogeneity of corporate investment, we found that relatedness investments will be executed within the corporate context because intensive interaction and coordination are needed. For the diversified investments, however, their execution will by and large be externalized because of the low interaction demand and the consideration of flexibility. Different investment characteristics affect the performance appraisal and incentive systems as well. For relatedness type of corporate venturing, companies seldom require the accountability of the venturing investment department since the decisions are not merely made by the department and there are some strategic considerations. However, such a low-power incentive system could not attract the top tier venturing investment managers to join. Based on these investigations, we submit that creating an effective incentive system under which corporate venturing activities are managed becomes a critical successful factor. Moreover, an effective organizational design for housing corporate venturing investments shall be able to smooth the internal conflicts and take a timely decision once detecting the potential problems in the invested companies, and enhance the success rate and reduce the loss. In addition, companies shall manage a goal balance between strategic value and financial profitability. Lastly, companies can consider to working with outside venture capitalists by leveraging their rich experience, network resources, and financial planning know-how to enhance the success rate of corporate venturing investments.